Overview
Tackling top healthcare logistics and supply chain challenges requires flexibility and innovation. Proactive supply chain management strategies help ensure efficiency and optimize costs, which in turn enhances patient safety, and improves emergency preparedness. In this piece, we examine the top warehousing and distribution issues in the healthcare industry, how we expect them to evolve.
Want to learn how your healthcare company can ensure it’s ready to respond? Read on.
Your Guide to Navigating Today’s Top Healthcare Manufacturing Logistics Issues
Of the prevailing factors impacting healthcare logistics today, some—such as shifting product temperature and traceability requirements— are newer and trending. Others—such as licensing complexity and forecasting storage needs— are evergreen dilemmas affecting the healthcare manufacturing and warehousing industry.
These are the top issues we at LifeScience Logistics (LSL) see clients navigate, and what we suggest looking out for:
Improving Warehouse Build-Out Time
Healthcare companies developing and launching new products often need storage space, and fast. Those who have explored setting up their own warehouse know that it takes time to build a facility that meets healthcare compliance standards. It can take up to 52 weeks to set up an appropriate generator system to support a redundant system. Meanwhile, it takes about 40-45 weeks to dial in a fully climate-controlled system.
Overall, it typically takes a year to build a fully functional, cGMP-compliant warehousing facility. But often, companies do not have that long to wait. Achieving fast speed-to-operation time requires a multi-functional team that is well versed in the construction components needed to build a functional and cGMP-compliant facility. Accessing this type of expertise often requires outsourcing to a specialized team with pre-existing, certified warehouse space to store your products.
What to do
Seek a specialized 3PL provider that offers pre-existing, ample, and compliant storage space across strategic locations. It’s also helpful for this partner to have a team of experts that scout new locations to support increasing demand.
Navigating State and Federal Licensing Complexity
Healthcare is (notoriously) a highly regulated space, which often requires turning to a third-party expert to help navigate that complexity. Companies such as pharmaceutical and medical device manufacturers must comply with strict regulations and guidelines to ensure product safety and efficacy. As healthcare companies grow and expand distribution, a common challenge is navigating the variability in licensing requirements, which can differ not only between states, but between state and federal levels. In one state it may cost $5,600 to hold a certain license, while it may cost only $300 in another state.
This licensing variability adds up and becomes challenging to manage at scale. A facility that will ship a DEA-controlled substance or prescription medical device across state lines may need to hold over 100 licenses. Meanwhile, the list of desired licenses and certifications is always growing and changing. There are emerging environmental certifications such as ISO 14000, which denotes management of a company’s adherence to environmental standards and protections.
As such, it is crucial for companies to either build an internal department or outsource to a healthcare-focused 3PL provider with a sophisticated regulatory department dedicated to maintaining necessary licenses and staying ahead of the market.
What to do
Seek a healthcare-focused 3PL partner or invest in a dedicated internal team to maintain the warehousing and distribution licenses you need. It is also crucial to invest in optimizing warehouse management and other tech systems to be able to quickly respond to changing regulations.
Ensuring Traceability for DSCSA Standards
Speaking of changing regulations, DSCSA drug distribution security requirements go into effect in November 2024. The DSCSA standards require product serialization so that you can see a drug’s place in the supply chain and pinpoint its location at any step in its storage and distribution journey.
This level of traceability is critical in the healthcare warehousing industry, as it enables manufacturers to track products throughout the supply chain and ensure their safety and efficacy. However, achieving full traceability can be difficult, as it requires the implementation of robust monitoring systems and the cooperation of all stakeholders involved in the supply chain.
Preparing for the DSCSA standards is a multifacted effort that involves understanding the extensive requirements, assessing current processes and systems, and implementing serialization and track-and-trace systems. The DSCSA preparation process also requires collaborating with supply chain partners, establishing data management systems, and testing those systems, as well as training employees and stakeholders on best practices.
What to do
Ensure you are DSCSA-ready. This means investing in internal DSCSA compliance efforts or partnering with an expert partner who understands the nuances of DSCSA compliance. If the latter, your partner should have the infrastructure to implement complex product tracing systems that leverage sophisticated warehouse management technology to ensure maintenance of a secure and traceable drug supply chain.
Improving Digitization and Tech
Increased use of technology presents both opportunities and challenges in healthcare warehousing and distribution. On the opportunity side, technology enables improvements in inventory management, supply chain visibility, order management, and traceability.It also supports effective regulatory compliance, cold chain management, last-mile delivery optimization, data analytics and predictive modeling, as well as remote system monitoring and maintenance. On the challenging side, effective tech requires investment in sophisticated system integration and data interfaces, especially in situations where there are no existing data format standards.
What to do
Seek a healthcare 3PL provider that has robust digital reporting systems and warehouse management technology to take full advantage of the opportunities available in warehousing and distribution optimization. Look for tech that is built specifically to ensure that clients have real-time visibility into the status of their products. And as above, look for a partner that is DSCSA-ready.
Expanding Temperature Control Requirements
Like licensing complexity, pharmaceutical temperature requirements continue expanding. Many pharmaceutical products require strict temperature control throughout the manufacturing and distribution process to ensure product integrity. This can be particularly challenging for products that require storage and transportation at extremely low temperatures, such as vaccines and biologics. Healthcare warehousers and distributors must ensure drugs meet the temperature requirements listed on their label claims–– at each point along the journey, from the warehouse to the last mile delivery, and on to the wholesale distributor.
As we see a shift in the pharmaceutical products being produced, we notice that temperature control requirements are also becoming increasingly complex. Vaccine temperature requirements are getting colder and colder. For instance, it used to be common for frozen products to be stored at 20-30°C. Now there is a growing need for -70 and even -80°C storage chambers. These changes require building new facilities with equipment to accommodate shifting temperature requirements. They also require building redundancies and protocols to manage those systems.
What to do
Seek a healthcare warehousing partner on the leading edge of cold chain management capabilities. Look for one with facilities and processes developed to support 2°C to 8°C refrigeration, or -30°C frozen, and -70°C ultra-low frozen storage space. Even better? Look for a warehousing and distribution partner that has refrigerated docks to maintain product integrity throughout product delivery, receipt, and transport to cold storage space.
Lowering Cost Pressures
Healthcare manufacturers face increasing cost pressures, driven by factors like inflation, rising raw material costs, patent expirations, and increased competition. This creates logistical challenges as manufacturers seek to optimize their supply chains while maintaining product quality and safety.
There are a few strategies healthcare companies can implement to combat cost pressures in their warehousing and distribution processes. First, it is useful to commit to a culture of continuous process improvement that entails a regular assessment of warehouse and distribution processes and inefficiencies and collection of employee feedback to uncover opportunities for cost savings. It is also helpful to leverage data analytics tools and technology to accurately predict demand and plan inventory levels, optimize warehouse layout, enhance coordination with partners, improve warehouse tracking, and optimize reverse logistics processes.
Another surefire strategy is to outsource non-core warehousing and distribution functions to a specialized 3PL provider who can offer scalability, cost savings, and access to specialized expertise. A larger 3PL partner that specializes in healthcare warehousing and distribution will already maintain the licenses you need. This partner should ensure licensing costs will be shared between clients, removing the full burden of licensing costs and maintenance from your budget.
What to do
Look for a specialized partner that offers FDA-registered, cGMP-compliant healthcare supply chain services at scale. This partner should be willing to meet with you regularly to consistently examine opportunities to refine processes that will reduce unnecessary costs and improve efficiency.
How LSL Can Help
Working with a healthcare-focused 3PL provider can help healthcare companies of any size navigate challenges like licensing complexity, traceability, and reducing cost pressures with relative ease. Since 2006, LifeScience Logistics (LSL) has delivered high-quality, flexible, and compliant supply chain solutions to pharmaceutical and medical device manufacturers, government entities, and healthcare organizations.
Want to learn how our FDA-registered, cGMP-compliant warehousing and distribution services can help ensure the safety and efficiency of your supply chain? Contact us on our website or call 469-844-3700 to speak with our Vice President of Business Development, John Blackington.